GameStop’s Recipe For In-Store Success: Follow The ‘Cheers’ Model
By combining advanced data with making sure sales associates ‘know your name,’ the gaming retailer is able to align online/offline marketing at scale.
GameStop is one of the few retailers that can credibly claim to have found a formula for reducing the practice of smartphone users walking into their stores to compare prices with e-commerce players like Amazon.
And while some retail marketing executives fret about managing issues like showrooming or figuring out what it means to be “omnichannel,” Jason Allen, GameStop’s VP of Multichannel, takes it all in stride.
As he told the Washington Post’s Sarah Halzack recently, “purchasing through [a smartphone] probably wouldn’t even make the top ten list of engagement activities that [our customers] do.”
Apart from the wide experimentation that GameStop does with data and digital, particularly at its year-and-a-half-old think tank/product testing lab, the GameStop Technology Institute, Allen emphasized one key ingredient that may set the brand apart from other retailers: an ethos among its brick-and-mortar sales associates that evokes the old NBC comedy series Cheers.
As Allen sees it, GameStop is a place where “everybody knows your name.” And by layering a variety of digital touchpoints along the way, GameStop is able to maintain that attitude across its thousands of outlets.
GeoMarketing: What’s your role at GameStop?
Jason Allen: I run our multichannel business, which includes GameStop.com and related creative services what I would call our “Switzerland” functions. Our primary focus is to do two things at the same time without leaving one behind.
That is a) to drive better customer experiences and b) to drive profitable growth. Everything that we do, we’re sort of looking at, are we checking those two boxes in our focus, our efforts, our priorities, our strategies, etc.
About five years ago, we launched our loyalty program called Power Up Rewards. Before that time, we really did not have a good understanding about who our customer was, what they bought at what times, what channels they preferred to buy on, and what were the reasonings behind those purchases. We didn’t know who were the influencers.
Fast forward to today. We have over 40 million loyalty members globally and about 31 million domestically. We’ve got about 4,200 stores in the US, and then another, roughly 2,000-plus overseas.
We’ve got quite a big footprint. What we found when we started to dissect all the data we were getting about our customers is that they weren’t using mobile devices to purchase directly, but it was heavily influencing in-store purchasing. We developed some attribution modeling so that we could take a look at what consumers were doing in a particular channel and see how that activity influenced a purchase in another channel.
We quickly saw a very strong pattern that indicated the opposite of traditional retail showrooming: Our customers still want to purchase, visit, and engage in our store environment. They use our online properties and our app and mobile devices as research tools to make a purchasing decision. But still ultimately come into a store to make the purchases 95 percent of the time.
How did that affect GameStop’s marketing strategies?
Now that we had that data, we looked at very specific 48-to-72 hour data of a customer. When someone comes onto the website or a mobile app, and you do a bunch of browsing around a game like Halo. Then we see that person go into a store that same day and buy Halo.
We look at that as sort of an “influence sale.”
We’re not moving any money around, but what we are doing is saying, “Gosh, if we just look at our mobile efforts and what they directly drive on a mobile device, we are missing the broader opportunity.” Ultimately, both our mobile efforts and our traditional e-commerce efforts, roughly every dollar we have in that business, it drives 10 times that amount in store.
That really changed how we looked at our business and how we prioritized our projects. I would say a very tactical example would be when we first got this data, we were in the middle of redoing our shopping cart on GameStop.com.
If we had had the data that we have today back then, we would have never kicked off that project because the reality of all the customers that were coming to our website, less than 5 percent were actually going into the shopping cart. Yet, more than 20 percent were going into a store within 48 hours.
Instead of focusing on a cart, we would have focused on things like search, product page, store locator, sort of the top points of engagement for our customers before they visit a store. Because now we could actually measure the effect of improving that functionality and how that would either drive increased traffic or increased conversion at the store, as well as direct conversion online. It just gave us a broader perspective of what our customer was doing across all of our channels, and allowed us to align our strategies around really what the customer was looking for.
There are three key things that drive that activity. One is that in this category, there’s a strong sense of immediacy around getting your hands on the product. For many releases, we’ll have midnight openings, launches.
A lot of games these days are multiplayer, friends play with their friends. So if you’re in a group of five friends, and all of your friends go up and pick out the game on midnight and they start playing Call of Duty or Madden, and they start leveling their characters or progressing in the games, even if you ordered it overnight, you’re already behind your friends.
So immediacy and fandom is something that will set GameStop apart from, say, a clothing retailer?
Yes, there’s a demand for immediacy to get the product as soon as to be able to be played. But there’s something else that sets us apart.
Because we’ve got so many locations, there’s a clear convenience factor of a store just a few miles from our customers’ homes.
The second aspect of that notion of convenience is our buy/sell/trade program. Consumers can bring in their old games, electronics, accessories, hardware, get cash or trade credit towards the purchasing of other items in the store. We don’t have that replicated online. That’s a massive driver for us because what was a $60 new title to somebody, if you could bring in $60 worth of trade and walk out without spending a dime, you just brought in your old game. That trading activity is certainly unique to our physical environment and drives traffic there.
It’s actually the most important reason: our store associates. They have such a fantastic relationship with our customers. Our customers trust their judgment. They trust their opinion. They enjoy their presence. We’ve got many customers that simply go into our stores after school just to hang out and talk with the folks running the store.
No amount of technology, recommendation engines, personalization is going to come close to a passionate human being having a great conversation about gaming or electronics or collectibles. I think that experience that our customers get in store with out associates is very Cheers like. They know many of our customers’ names. They know what they like and what they don’t like.
When you combine that with the uniqueness of our trade program and the immediacy of the product itself, it really does help create that environment where our customers, really, they want to go into a store. They want to get their product from a store. They want to talk to a store associate. They want to trade in their games so that they get their new game for less.
As you noted, GameStop has so many locations around the world. How do you instill all those marketing factors and touchpoints — especially the “Cheers-like” atmosphere — at your franchises?
It’s a mix. From a broad marketing perspective, certainly we use digital and direct response email advertising to reach customers. We can target customers by location. When you really start getting into local marketing, we like to empower our store associates and our leadership in our field to really take the lead on any local marketing efforts. We do that for a couple of reasons.
First of all, just based on geography, the types of products that might be interesting to somebody in California may be very different than somebody in the northeast. For example, hockey does very well when the next hockey game comes out, it does very well in the northeast. Whereas, FIFA does fantastic in our southern markets. It does fantastic in all the markets but even trends higher in southern markets. The reality is our store associates and our field leadership are the closest to our customers. They understand our customers the best. They understand the markets. They understand what’s interesting to their customers and those markets. We empower them to create local marketing efforts, sometimes even down to the store level.
How does “empowering” staffers at the store level work from a practical standpoint?
It does a couple of things for us. One, it creates a level of authentic co-creation with our associates. They feel like they’re part of the plan, and they are. They’re working with their leadership in the field to develop ideas and run sidewalk sales or establish events. Sometimes they’ll work with other businesses completely autonomously to drive partnership on those events.
Not only does it give them a sense of pride in helping drive that, but it’s also much more authentic to our customers in those areas. Because, instead of running a national campaign where we treat everybody like they’re one segment, our stores are really trying to personalize that experience for the customers in their area. That just goes right back into the “Cheers mentality,” creating a one on one relationship with each of our customers.
Aside from balancing online and offline behaviors, a big challenge for large retailers is figuring out what digital advertising and marketing efforts can be attributed to driving in-store sales and traffic. Does GameStop mostly use internal metrics to get the answer?
Certainly we do some of that today. I would say that what’s interesting about our industry is that there are really a couple of types of traffic that we get. There’s the traffic we generate ourselves, which I think is the smaller bucket.
The larger bucket is not much different from the movie industry. There are blockbuster releases. We don’t necessarily control when those releases come out, when the big games come out. When they do, we need to make sure we’re getting the word out. Here’s why you should buy that game from GameStop. Here’s what makes the experience better. Here’s how we can deliver you a better value.
Really, even more so important than technically trying to drive the traffic is when these sort of organic releases are happening, or around major holidays, how are we getting customers to think of GameStop first? Are we maximizing those opportunities? Yeah, certainly we look at attribution models. We look at affiliate relationships and traffic that comes in from our affiliates, email, SEO, SEM, retargeting, all of them.
We have ROI models across all of them to see how they perform with direct sales online and what customers are more likely to come to a store for.
We might find that some acquisition channels, they might convert a little better online, but when you look at the broader picture, some other channels might certainly take priority because we’re driving much more traffic to the store. Any time we can get a customer in front of a store associate, that’s when we’ve got our highest average order value.
In terms of looking at technology to enhance the in-store experience, GameStop has worked with Gimbal on testing beacons throughout Q2. What are the expectations around beacons and how are you exploring them?
We have a division called GameStop Technology, GTI. They’re focused on a couple of things, but primarily they’re out there evaluating new and emerging technologies, and looking to see which of these technologies can enhance customer experience or an associate experience in a physical environment.
Certainly, beacons are something that we’re experimenting with. We’ve got some test stores down in Austin, Texas, where we’re utilizing beacon technology to test an array of triggered events that beacons might be able to help with. I think what a lot of retailers are trying to figure out is, ourselves included, where is the future going in the merging of the digital and physical space.
A lot of retailers worry that beacons and other proximity marketing is becoming too closely associated with “discounts and deals, ” as opposed to advancing a general notion “enhancing the in-store experience.” How does GameStop view that issue?
It’s certainly a learning process. If all beacons becomes is a coupon delivery mechanism, then it won’t have a long shelf life, right?
What we’ve got is a technology that allows us to do some hyper-location based targeting. But I don’t think we as an industry have some really good uses for beacons that have been proven and scaled. This is an example where the technology came first, and the problem that we’re trying to solve is coming after.
Generally speaking, we’re involved with beacons and many other technologies. We’ve got tablets that are in our stores where we’re providing more information for our store associates to use as a sales tool, and understanding how that can help them have a better interaction with the customer by being armed with more relevant target information about that customer or about the most recent selling products or the hottest games, etc. We’re constantly evaluating those opportunities. Ultimately, the companies that are successful at finding the right balance between the digital and physical space are going to be the companies that stay closest to the consumer and follow the consumer.
When we looked at all the data from our PowerUp Loyalty Program and we saw that our customers were engaging in all of these channels to help drive a purchase in store, they weren’t necessarily doing that because 10 years ago, we set up a website that made it easy for them to browse. We just happened to get access to the data that showed us what they were doing. As consumer engagement evolves across the channels, across devices, as long as we’re connected at the hip and understand how consumers are evolving, and we’re matching our efforts to how consumers want to shop, browse, engage and buy, regardless of when, where and how, I think we’ll be successful.